Trade-in time - but car buyers put on status alert

Deferred decisions by motorists to swap their car for a newer model could go into reverse next year, suggests UK finance provider The Funding Corporation (TFC).

The company, which specialises in non-prime loans for private car buyers, says predictions that income levels will rise in 2013 could trigger an increase in used car sales.

However, it warns, many customers may find that the lending landscape has changed drastically since they last took out car finance - and that their loan application could now be declined.

TFC says its customer analysis shows that almost all banks and other mainstream lenders now apply much tighter lending criteria than they did just a few years ago.

Even just minor blemishes on a credit file, such as a few missed credit card or mobile phone payments, can now add up to the rejection of a loan request, it says.

The group, a provider of finance for people with impaired credit records, issued its warning after the publication of reports that UK households will see a rise in real income levels next year.

They included a prediction by the Centre for Economics and Business Research that incomes are set to increase by up to 1.5% in 2013 - the first rise since the onset of the financial crisis.

According to the economic body, it will be middle and low-income families which benefit the most.

“It is precisely these groups which have been holding onto their cars for longer, rather than committing to more finance in uncertain times,” said Richard Cox, TFC’s Head of Motor Operations.

“Whilst the predicted income rise isn’t huge, it may well be enough to boost consumer confidence and drive more prospective buyers onto the car forecourts.

“They might be advised, however, to take the precaution of ascertaining their loan status in advance, especially if they believe their credit record may have altered in recent times.

“Even a high salary won’t be any defence against a low credit score,” said Richard.

Many TFC customers refused by banks, he added, show no evidence of having chronic repayment problems, and are often the victims of past lapses which have since been remedied.

“Those who have been exercising caution by postponing a decision to change their car may now feel their confidence bolstered by these latest income forecasts,” commented Richard.

Vehicles funded by TFC are supplied by the group’s retail company ACF Car Finance which has used-car dealerships throughout the country (see www.ACFCarFinance.co.uk).

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ACF Car Finance Limited is Britain’s leading supplier of high-quality used cars to people whose credit status might otherwise prevent them from obtaining a used car loan. ACF Car Finance has earned a strong reputation within the finance and motor industry for its standards of customer care, and the quality of the friendly, professional advice provided by members of its fully-trained team. The company has a Facebook page at www.Facebook.com/ACFCarFinance, and can be followed on Twitter at www.Twitter.com/ACFCarFinance.